Monitoring Processes
Most service providers have learnt the hard way that initially not having set-up a detailed and strongly enforced monitoring process, with daily and weekly reports, has led to delayed identification and rectification of poor performance of agents and supervisory staff. This has meant higher attrition and lower productivity.

Industry Regulation
As the employees and management of the Indian service provider have not grown up in the environment created by industry regulators, they have not imbibed the seriousness and significance of being strictly compliant. This has been a roadblock in driving greater business that comes under close scrutiny by the regulators in the US.

Pricing Model
The collection business is basically a revenue share (contingency) business, where as Indian service providers have mostly opted for a fixed price model with their clients. While this would help the Indian service provider reduce risk and initial cash expenses over the first six months due to the expected lower productivity of the collection agent. But once the productivity of the Indian collection agent rises above 75% (relatively to the US collection agent), the Indian company is leaving money on the table for the duration of that client engagement. This becomes a very significant figure over time, as the Indian agent is able to achieve 90% or more productivity on average after six months. Also note the client will always build a healthy cushion in the fixed price model to cover their risk over the first six months. So the risk premium is never borne by the client in any case.

Revenue Enhancing Versus Lower Cost Services
Until the management of the Indian service provider has complete conviction that this business is not about lower cost but one of revenue enhancement through the use of latest collections technology and the exceptional talent pool that Indian provides, they would never be able to exploit the full potential that India provides.

Customer Care Versus Higher Collections
There is a distinct perception that the Indian agents are too customer service oriented and have a very difficult time asking for full balance payment. This is a cultural issue that needs to be addressed through proper training and incentives for higher collected amounts.

Our research Has Indicated That While Fixed Price Rates Vary Between
$ 9
12 per seat per hour, the variable rate model has provided established Indian service providers a rate between $ 12-15 per seat per hour. Interestingly, US collection agencies running their own programs in India have achieved rates above $ 20 per seat per hour with productivity more than 100%, relatively to the US. Hence the Indian service providers working on fixed rates are leaving a very significant profit margin on the table.

Indian Service Provider - Mind Set & Capabilities
Over the last three years we have assisted US companies outsource their collection programs to Indian service providers and more recently helped identify appropriate joint venture partners for both US and Indian companies where by they not only build good service capability from India but that the relationship has a long-term game plan to create enduring value for both partners.

While it is encouraging to note that the capabilities of the professional managed Indian service providers is very high, the mind set of the senior executives of most is very inward thinking and they lack the capability to objectively look at the global market. Their strategic thinking ability is more driven by containing costs and not by how to win clients / market share through revenue enhancement capabilities. The irony is that while this business is all about servicing international clients the understanding of how to leverage onshore and near-shore capabilities is non-existent baring a few companies whose promoters have already been forced to become global with their parent company business.

Until and unless the following are imbibed as strategic imperatives the future of any Indian service provider in collection services is going to be one of a marginal player.

Front-end Presence
Either buy a front-end presence like ICICI OneSource or do a JV with an established debt buyer / collection agency like Zenta Group. Ensure that the JV has strong operational commitment from the US partner.

Delivery Capability
Lean very heavily on the front-end entity (owned or through JV) to provide all the hiring, training, systems design, process and monitoring capabilities to get the start-up right. Till delivery and productivity is not up to specs do not ramp-up above 100 FTEs.

Agent Retention
Provide high incentives (up to 100% base salary) to the agent for high productivity to keep attrition in check and motivate the high performing agents.

Regulation
To ensure very high compliance with regulation, have regular programs to update all agents and supervisors and remind them regularly the penalty for not meeting compliance. The penalty should be very stringent and enforced.

Pricing Model
Have to have conviction of capability and go for a variable (contingency) based pricing model.

Revenue Enhancement
Use the new software / analytics tools available for collections and agent monitoring along with the exceptional talent of the Indian agent / supervisor to work intelligently and deeper in to the inventory provided by the client.

Conclusion
From the above it is evident that India is very well positioned to take advantage of the high growth happening in the US collections market. But to be a successful service provider one has to ask oneself :

• What has Zenta Group and ICICI OneSource done to position themselves?
• Are there any insight to be gained from the other partnerships between Global Vantedge/OSI, Tracmail/NCI and HCL Technologies BPO/D&B Receivables?
• What is the strategic differentiator(s) one needs to create to become a significant player in   the US market?

These are areas that our firm has focused on and continue to work with our clients, both in the US and India.